Thaksin cashes in his chips

Thailand’s embattled prime minister, Thaksin Shinawatra, has sold his family’s holding in Shin Corp, a telecoms and media giant, to Singapore’s Temasek for almost $2 billion. Mr Thaksin hopes this will end the constant accusations of conflicts of interest against him. However, it may not be enough to reverse a slump in popularity that has some Thais asking how long he can survive in office

LESS than a year after making history by becoming Thailand's first democratically elected prime minister to win a second term, Thaksin Shinawatra's popularity has plunged. The reasons are manifold: rising inflation and interest rates; the government's clumsily brutal handling of unrest in the Muslim southern provinces; allegations of corruption and favouritism; and opponents' claims that the prime minister shows insufficient respect for King Bhumibol — a grave allegation in ardently royalist Thailand. So steep has been the decline in Mr Thaksin's ratings that there is feverish speculation among Bangkok's chattering classes about a possible coup or some other move to force him out of office.

However, Mr Thaksin, a tough former policeman, is not giving up without a fight. To revive his popularity among core supporters — poorer, rural Thais — he has in recent days been taking part in a sort of “reality TV” show, in which cameras have accompanied him around an impoverished north-eastern village, as he dispenses advice, cash and plots of land to grateful peasants. In another grand gesture, announced on Monday January 23rd after months of speculation, the prime minister and his family are ridding themselves of the telecoms and media empire that they built from scratch, over more than 20 years, into one of South-East Asia's largest firms. Singapore's Temasek Holdings, along with a group of Thai investors, will pay 73.3 billion baht ($1.87 billion) for the controlling 49.6% stake in Shin Corporation that is held in the names of Mr Thaksin's children.

By disposing of most of his family's business interests, Mr Thaksin hopes to free himself from some of his opponents' most damaging accusations: that he is shaping Thailand's laws to suit his personal business concerns; and that he is using his domination of Thailand's media to suppress criticism. Like his Italian counterpart, Silvio Berlusconi, who has faced similar accusations, Mr Thaksin firmly denies them. But the fact that Mr Thaksin's firms operate in such sensitive and highly regulated areas makes it is easy for opponents to raise suspicions that he is somehow putting private gain ahead of the public interest.

Shin Corp's interests include a large share in AIS, Thailand's biggest mobile-phone operator, which has a 55% share of the domestic market. It also owns a majority stake in iTV, the country's only non-state television network; a 40% stake in CS Loxinfo, a big internet provider; and a 41% stake in Shin Satellite, a satellite-communications operator.

As well as making political sense, the sale of Shin Corp appears to have a fair amount of business rationale behind it. Temasek is the main shareholder of Singapore Telecommunications (SingTel), which already owns almost one-fifth of AIS. SingTel includes AIS in its growing portfolio of telecoms businesses in fast-growing Asian markets. Subscriber numbers in Thailand, a country of 64m people, are expected to grow by around 10% this year. The penetration of mobile telephony, at 46 phones for each 100 people, still has a long way to catch up with that in neighbouring Malaysia, for example, where it is 65 per 100 people, let alone that in Singapore (90 per 100).

AIS itself will benefit from having a foreign backer with strong technology and deep pockets as it moves into third-generation (3G) telephony. It is likely to face serious competition after its main domestic rival, Total Access Communication, sold a controlling stake to Norway's Telenor. And Mr Thaksin and his family will pocket what analysts say is a fair price for their shares.

A question of politics

Perhaps of more pressing concern to Thais is whether the prime minister's disposal of his main business interests, combined with his reality-TV stunt, will restore his political fortunes. Or might Thailand be set for turbulent times following a calm and prosperous few years? When Mr Thaksin first took office in 2001, Thailand was still suffering the after-shocks of the 1997 Asian economic crisis. But under his administration, tigerish rates of growth returned, poverty fell and the wobbly banking system cut its bad debts sharply. Whereas elections had hitherto been more about personalities than policies, Mr Thaksin's Thai Rak Thai (Thais Love Thais) party sailed to victory in last year's elections on a raft of clear and popular proposals, including micro-credit schemes, cheap health care and debt relief for farmers. Mr Thaksin's “CEO” style of government, in which officials deemed to have failed to meet their targets were publicly berated, went down a storm.

But in recent months, as the economic figures have begun to look less impressive and opposition leaders' accusations of high-level graft and incompetence have begun to stick, the prime minister's popularity has slipped alarmingly quickly. Late last year, Thai Rak Thai lost two parliamentary by-elections (though it still retains a big majority). Sondhi Limthongkul, another media tycoon who was once an ally of Mr Thaksin but is now a bitter critic, has been drawing big audiences for protest rallies around the country. There is also widespread grumbling against the government's proposed free-trade agreement with America and a recent court ruling has threatened to disrupt a flagship privatisation programme.

Some observers are taking at face value Mr Thaksin's assertion that his family is selling its business interests so he can concentrate on political challenges. Others speculate that Mr Thaksin is selling up while he can, because he knows he is on his way out. In Thailand's coup-prone past, deposed leaders often had their assets seized or undermined after they left office. Perhaps both theories have a grain of truth: the prime minister may be determined to carry on and prove his critics wrong, but converting his business assets into ready cash is a handy insurance policy in case he is forced out. It helps, too, that the price offered by Temasek was generous. Mr Thaksin's family will have a large sum which they could now invest in businesses with even stronger growth prospects than those of Shin Corp.